Question

Lucky Corporation began the year with a simple capital structure consisting of 200,000 shares of outstanding common stock. On April 1, 16,000 additional common shares were issued, and another 32,000 common shares were issued on August 1. The company had net income for the year of $570,000.

Required:
Calculate the earnings per share of common stock.

Answer 1

2.53

Step-by-step explanation:

earnings per shares=net income / weighted average earning per shares

begining common stock =200,000 shares

April 1: 16000*9months/12months=12,000 shares

August 1: 32000*5months/12months=13,333shares

weighted average earning per shares=200,000shares+12000shares+13333shares=225333shares

earnings per shares=570,000(net income)/225333shares=2.53